What legal convictions or pleas by the Southern Steer Multi-Unit Developer can result in immediate termination?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- (f) the Multi-Unit Developer or any of its Owners, Operating Principal, Executive Management, Guarantors or Controlled Entity are convicted of, or plead guilty to or no contest to a charge of violating any law, and such conviction or plea could have a material adverse effect on the Multi-Unit Developer 's right or ability to operate the Southern Steer Businesses, perform its obligations under this Agreement or could have a material adverse effect on the Marks, goodwill, reputation or System;
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, the Multi-Unit Development Agreement can be terminated if the Multi-Unit Developer, its Owners, Operating Principal, Guarantors or any Controlled Entity are convicted of, or plead guilty to or no contest to a charge of violating any law. This conviction or plea must have a material adverse effect on the Multi-Unit Developer 's right or ability to operate the Southern Steer Businesses, perform its obligations under the agreement, or have a material adverse effect on the Marks, goodwill, reputation or System.
This means that a legal conviction or plea could significantly impact the Multi-Unit Developer's ability to continue operating Southern Steer franchises. The determination of what constitutes a 'material adverse effect' is crucial, as it serves as the trigger for termination. This could include convictions or pleas related to financial crimes, fraud, or any other legal violation that damages the brand's reputation or the franchisee's operational capabilities.
Prospective Multi-Unit Developers should carefully consider this clause and seek legal counsel to understand the full scope of potential convictions or pleas that could lead to termination. It is important to assess the types of legal violations that could be considered material and how Southern Steer interprets and enforces this provision. This also extends to the Owners, Operating Principal, Guarantors or any Controlled Entity, so all involved parties should be aware of the implications.